Evaluating the business case for automated warehouse systems

Up to 60 per cent of warehouse functions – stock handling, inventory management and dispatching – will be replaced by bots and machines, but for many medium-sized manufacturers, these predictions are way off. A move to full automation is costly and many small and medium-sized enterprises (SMEs) don’t have access to the financial resources required.



From Indigo’s experience working on a daily basis with companies across the UK, many organisations will partially automate aspects of their warehouse operations to make more affordable efficiency improvements.



Before investing in automation it’s essential to consider the volume, size and diversity of order profiles being processed. Full warehouse automation can deliver significant returns for high-volume repetitive tasks. However, due to the high cost of such systems, decisions to automate need to be based on a careful analysis of the long-term benefits.

Where high-value goods are involved, automated handling can generate a rapid payback. However, if a business is sending smaller orders to hundreds of outlets and varieties of customer types, each with different delivery and value-add requirements, it’s difficult to automate fully and efficiently, and retain the flexibility needed. In these situations, it can be beneficial to adopt a hybrid approach and simply introduce partial automation in specific problem-zone areas that offer the greatest returns and scope for rapid improvement.

A common partial-automation strategy involves integrating new technology, for example automated sortation systems, weighing scales, conveyors or cardex systems, with an existing warehouse management system (WMS). A conveyor could be installed in a key area, for instance goods in, between picking zones or for operator workstations. This helps to increase efficiency because standalone processes can be optimised to improve productivity and accuracy levels, without having to re-engineer the entire warehouse operation and manage a changeover to an entirely new WMS.

Many organisations will partially automate aspects of their warehouse operations to make more affordable efficiency improvements

Opting for partial automation and the integration of new equipment with an existing WMS is also less costly to implement and means the company can ensure they have maximum flexibility, should they need further changes to their warehouse in the future.

For example, manufacturers with high seasonality of demand may need to switch production lines throughout the year and operate some periods where goods are shipped straight from production, by-passing the warehouse entirely. This would require the integration of automated dispatch areas including conveyors or weighing scales in the production environment that are only required at set times of the year and which can be done cost efficiently with a partially automated solution.



Order picking and dispatch are two examples where partial automation can deliver quick wins. Each is highly labour intensive and impact end-customer satisfaction levels. For shipping and dispatch, many manufacturers have introduced a manual final checking stage after stock picking to validate “on time in full” key performance indicators, which can also be improved with partial automation.

Automating the release of sales orders into different streams can save order management time. Various attributes can be set, so orders are automatically batched and directed to different streams, which subsequently determines the picking and dispatch style, thus eliminating any need for human intervention.

Warehouses are often tasked with customising a delivery as a value add, to cut merchandising time. This presents a challenge for the warehouse to speed up the process, retaining the quality, but without incurring extra costs. Typical value adds include retailer codes and packaging, custom barcodes, pricing or promotional hangers, size cubes and packaging waste reduction.

To avoid this, order picking can be automated into a uniquely numbered carton. As the carton is delivered to the workstation, the WMS system automatically prints a list of value-add requirements, customer specific product barcode labels and carton labels, which are then applied to the garments and cartons. Each carton is processed separately and then marshalled for the delivery prior to dispatch.

Partial automation is a cost-effective alternative to full warehouse automation and small incremental improvements can achieve significant return on investment.

For more information please visit www.indigo.co.uk